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Ai Group urges changes to climate plan

Lexi MetherellUpdated
Mon 25 Nov 2013, 8:35 AM AEDT

The Government says a reverse auction would be at the centre of its proposed Emissions Reduction Fund. But in its submission on the scheme, the Australian Industry Group says the reverse auction plan won't always deliver. The Government wants the $1.55 billion dollar fund to be used to cut domestic emissions, but the Ai Group argues international emissions should also be included.

Transcript

TONY EASTLEY: A key business body says a central part of the Government's climate change policy isn't always going to work.

The Government is proposing to pay polluters to reduce emissions under its $1.5 billion Emissions Reduction Fund.

But in its submission on the scheme, the Australian Industry Group - AIG - says companies aren't always going to be able to deliver as planned.

And while the Government wants the fund to target domestic emissions, the Ai Group is urging the Government to include international carbon emissions as well.

Lexi Metherell reports.

LEXI METHERELL: The Government wants its Emissions Reduction Fund up and running in July.

It called for submissions from interested parties ahead of a white paper on the fund's design due early next year.

In its submission, the Australian Industry Group says the timeline is short for such an ambitious policy and doesn't provide opportunity for careful consideration of key parameters.

The Group's chief executive is Innes Willox.

INNES WILLOX: This a very tight time frame that we're working to. There's a clear consultation process that the Government's put in place that we welcome. But it will be tight.

LEXI METHERELL: And in fact even the first deadline for submissions which was the 18th of November, hasn't been met by the Australian Industry Group and others. You had a month to provide submissions but they've been handed in late.

INNES WILLOX: Well that's because we have to consult widely. We have a very broad membership. This is perhaps an indication of what is to come, if we're going to get a good outcome and a proper outcome, we will need to be fairly deliberate in our actions.

LEXI METHERELL: The Government wants the $1.5 billion fund to be used to cut domestic emissions.

But the Australian Industry Group argues international emissions should also be included.

Innes Willox says the Government should spend a portion of the allocated budget on the reserve of international carbon credits.

INNES WILLOX: We need to get our emission reductions done at least cost. This is one way of doing it. This is also a fallback in case the emissions reduction fund, for whatever reason, doesn't deliver on the outcomes that it seeks. And basically it also gives the Government some room to move if it decides to move beyond its current emissions reductions target of 5 per cent below 2020 levels.

LEXI METHERELL: So the Australian Industry Group is already countenancing the prospect that the Government's climate policy might not actually achieve Australia's targets, which at the moment is to reduce emissions by 5 per cent by 2020 and the Climate Change Authority is recommending that it be at least 15 per cent.

INNES WILLOX: What we're putting forward here and proposing to the Government is a very prudent fallback in case that target can't be reached or if the Government indeed wants to go further than 5 per cent.

LEXI METHERELL: The Government says a reverse auction would be at the centre of the fund.

That would involve companies and landholders competing against each other for funding to reduce emissions.

But Innes Willox says such a scheme carries risks.

INNES WILLOX: Some winners in auctions aren't going to be able to deliver what is promised because changed market conditions all alike between the purchase of abatement and project delivery. So, look, there are a lot of variables at play here, so that's why another way that we say the purchase of international abatement is a very prudent fallback for the Government to consider.